Nintendo Co president Satoru Iwata has become the target of criticism from investors and analysts after sales of the Wii U console fell short of the projected 100 billion yen profit.
Iwata’s misjudgement had cost Nintendo a staggering 35 billion yen in losses, after the Wii U failed to match its predecessor’s success. Nintendo was forced to cut projections for Wii U unit sales by 69 percent and game sales by 50 percent.
“Iwata misunderstood the market,” said Yasauki Kogure, chief investment officer at Tokyo-based SBI Asset Management Co, which holds Nintendo shares. “His direction is not what it should be.”
Two analysts downgraded the stock to the equivalent of sell after Nintendo’s revision. Hideki Yasuda, with Ace Research Institute in Tokyo, rated Nintendo underperform and gave a price target of 8,000 yen, or more than 40 percent below the January 20 closing price, according to Bloomberg Businessweek.
Shares of Nintendo, the world’s largest maker of video game machines, fell 2.8 percent to 13,365 yen at the midday trading break in Tokyo on Tuesday after dropping 6.2 percent Monday.
Nintendo said Iwata explained his responsibility and vowed he would ensure a recovery with a “new business structure.” Iwata added he felt he had misread the market.
Nintendo needs to keep better “track of trends in the west,” says Iwata, according to the Wall Street Journal.
“If we stay in one place, we will become outdated,” Iwata said, noting how the company has now only realized that lifestyles and ways people use their time has changed. “In Japan, I can be my own antenna, but abroad, that doesn’t work.”
Iwata has focused on family-centered games, which are losing favor as casual players use smartphones and tablets while hardcore gamers opt for more advanced gadgets from SonyCorp and Microsoft Corp.
Iwata was the driving force behind the soaring sales of Nintendo’s game consoles, such as the Nintendo DS, the Nintendo DS Lite, the Wii, the DSi, the Dsi XL and the 3DS.
But the recent mishap is a stumbling block in his career after tripling the video game machines maker’s revenue with the Wii.
“Iwata, who is very much a video-game man, must leave,” Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc in Singapore said in an e-mail.